Tariffs & Your IT budget: What You Should Know
Impending Tariffs, Outdated Hardware, and the High-Stakes Decision Facing IT Leaders
With global supply chains still adjusting to post-pandemic instability, rising geopolitical tensions, and increasing protectionist policies, tariffs are once again looming over the tech and manufacturing sectors. The Biden administration’s proposed increase in tariffs on Chinese imports — including semiconductors and key hardware components — has reignited a critical conversation in IT circles: Is now the time to modernize outdated infrastructure, or should organizations continue to stretch legacy hardware and delay investment?
At first glance, holding off on big capital expenditures might seem like the fiscally responsible move. But in today’s threat landscape, where cyberattacks are increasingly sophisticated and compliance requirements more stringent, pushing legacy systems to the brink could prove to be the costliest gamble of all.
Let's explore the situation from both angles and offer a strategic take on the smarter long-term play.
Understanding the Tariff Timeline and Scope
U.S. Trade Representative recently signaled intentions to raise tariffs on a range of Chinese goods, including critical components used in servers, networking equipment, and storage devices. If implemented, these tariffs could take effect as early as mid-2025, potentially increasing costs by 25% or more on select imports.
For organizations still relying on aging infrastructure—think servers more than 5–7 years old, unsupported operating systems, or out-of-warranty networking gear—this development represents a narrowing window of opportunity. Once tariffs kick in, the cost of replacing that hardware could rise significantly, adding pressure to already strained IT budgets.
But hardware cost isn’t the only concern. The real issue lies in what these legacy systems are costing you now—in performance, security, and compliance.
The Real Cost of Legacy Infrastructure
1. Security Vulnerabilities
Legacy systems are notorious for being the weakest link in an organization’s security posture. Unsupported operating systems, outdated firmware, and patching limitations create ripe conditions for exploitation. Cybercriminals actively scan for and exploit these known vulnerabilities, and in many ransomware attacks, legacy endpoints are the initial vector of compromise.
Stretching obsolete hardware may seem efficient—until a breach occurs. And with the average cost of a data breach in 2023 surpassing $4.45 million globally (according to IBM), the stakes couldn’t be higher.
2. Compliance Gaps
Regulatory compliance frameworks such as HIPAA, PCI-DSS, and the FTC Safeguards Rule increasingly require up-to-date systems and regular vulnerability management. Unsupported hardware can instantly put you out of compliance—triggering fines, legal exposure, and damage to your reputation.
For industries under intense scrutiny, like healthcare, financial services, or automotive (where FTC oversight is rising), the cost of noncompliance alone can exceed the cost of a hardware refresh.
3. Operational Drag
Old hardware often means degraded performance, bottlenecks, and incompatibility with newer applications or cloud environments. It limits your ability to scale, slows down innovation, and puts your IT team in constant firefighting mode.
Add in the hidden cost of downtime and lost productivity, and suddenly the “savings” from delaying upgrades begin to evaporate.
Why Now Might Be the Strategic Window for Change
If your organization has been on the fence about modernization, the prospect of incoming tariffs should serve as a wake-up call—not a reason to panic, but a reason to plan with urgency.
Here’s why acting now, rather than later, might be your best strategic move:
1. Beat the Tariff Clock
Hardware prices are already inching up, but the real jump is likely to occur after tariffs are formally enacted. Getting ahead of this curve means you can still procure essential infrastructure at today’s rates—potentially saving 20–30% versus waiting another 6–12 months.
2. Leverage End-of-Fiscal-Year Incentives
Many vendors and distributors offer aggressive pricing and financing options in Q2 and Q3. Whether it’s trade-in credits, bundled services, or 0% financing, now is a great time to negotiate deals before demand spikes and supply tightens post-tariff.
3. Modernization Enables Better Security and Compliance
Updating hardware isn’t just a tech play—it’s a risk management move. Newer systems come with built-in encryption, firmware integrity checks, and improved support for endpoint detection and response (EDR) solutions. They also ensure you’re running supported OS and firmware, closing compliance gaps.
4. Position for AI, Automation, and the Cloud
Most legacy environments simply can’t handle the compute needs of AI-enabled security tools, automation platforms, or hybrid cloud orchestration. Refreshing infrastructure now sets the foundation for tomorrow’s innovation—giving your organization a competitive edge.
But What If the Budget Just Isn’t There?
For many SMBs or underfunded departments, a full rip-and-replace just isn’t feasible. That doesn’t mean you’re stuck. Here’s a hybrid approach to consider:
🔷Prioritize by Risk: Start by identifying the hardware most exposed to external threats or compliance risk. Begin upgrades here.
🔷Adopt As-a-Service Models: Consider Hardware-as-a-Service (HaaS) or Infrastructure-as-a-Service (IaaS) offerings to spread costs over time.
🔷Layer in Security: If you can’t upgrade right away, ensure robust endpoint protection, patching, and segmentation are in place to isolate legacy assets.
🔷Phase Out Smartly: Build a multi-phase roadmap that aligns IT modernization with business objectives, rather than treating it as a one-off project.
What’s the Move?
Ultimately, the decision to upgrade or delay comes down to risk tolerance, budget, and strategic vision. But for most organizations, the convergence of rising tariffs, growing cybersecurity threats, and stricter compliance rules make it clear:
Delaying upgrades is no longer just a technical debt issue—it’s a business risk.
If your organization has been running legacy infrastructure on borrowed time, the smart move is to act before the tariff hammer drops. Modernizing now may cost money, but waiting could cost you far more in security incidents, fines, lost business, and inflated hardware costs.
Closing Thoughts
There’s no one-size-fits-all answer, but there is a common thread: proactive organizations that align IT investments with emerging risks tend to outpace those that react under pressure.
If you’re unsure where to start, consider a strategic infrastructure assessment to evaluate risk exposure, hardware lifecycle, and compliance standing. This will give you the clarity to make informed decisions—before market forces and cyber threats make them for you.
